Britain’s high streets are being undermined by a growing “shadow economy” driven by illicit tobacco, stolen goods and counterfeit products, according to a new report commissioned by Co-op.
The retailer has called for greater investment in enforcement, more raids on premises suspected of selling illicit goods and wider use of the Tobacco Track and Trace (TT&T) system.
The Legitimate High Street Framework, written by criminologist Professor Emmeline Taylor, argues that crime is not simply a consequence of high street decline but can actively accelerate it by allowing organised criminal networks to establish a foothold in communities.
The report is accompanied by a YouGov survey of 1,090 UK smokers and Freedom of Information (FOI) data from local authorities in England.
The survey found that 36 per cent of UK smokers have bought illicit cigarettes, including illegally imported branded products and counterfeit or unbranded cigarettes. The proportion rises among younger smokers, with 47 per cent of those aged 18-24, 40 per cent of 25-34-year-olds and 49 per cent of 35-44-year-olds saying they had bought illicit cigarettes.
Price appears to be a key driver, with 62 per cent of smokers who purchase illicit tobacco saying they do so because it is cheaper. Meanwhile, 67 per cent of those buying counterfeit tobacco said they were aware the products might not be pure but were prepared to take the risk.
Co-op said an undercover exercise targeting 24 apparently legitimate shops in a small geographical area found 18, or 75 per cent, selling illegal tobacco. The average price was £5 a pack, with the highest recorded at £8.
The retailer said illicit tobacco is increasingly sold through businesses operating alongside legitimate retailers. Among smokers surveyed who had purchased illicit cigarettes, 44 per cent said they had bought them from corner shops, while 15 per cent cited vape shops, 11 per cent independent supermarkets and 4 per cent barbers.
The report estimates that between two billion and 10 billion illicit cigarettes are sold in the UK each year, contributing to an estimated £1.4 billion in lost tobacco duty.
Co-op’s FOI exercise, covering 122 councils with Trading Standards offices, found that local enforcement activity remains limited. Councils visited an average of just four shops a month to investigate illegal cigarette sales, while confiscating illegal tobacco from approximately one shop every two weeks.
Enforcement also varied significantly between councils. Two-thirds of seizures and more than 75 per cent of confiscated illegal cigarettes were accounted for by just 25 per cent of councils. Trading Standards offices in Yorkshire and the Humber reportedly seized ten times as many cigarettes per resident as those in London.
Co-op said the figures also demonstrate the effectiveness of enforcement when it does take place. Councils found illegal cigarettes in 43 per cent of visits to suspect premises, with an average of 8,000 cigarettes confiscated per seizure.
The retailer also highlighted what it described as the underuse of the TT&T system, which enables tobacco products to be tracked through the legitimate supply chain to retailers.
Of 122 councils responding to the FOI request, 57 per cent reported no engagement with the technology. Fewer than 6 per cent of more than 8,200 seizures were referred through TT&T, with 75 per cent of referrals coming from just 15 councils.
Co-op director of public affairs and campaigns Paul Gerrard said the evidence showed how illicit economies were “shaping the face of high streets up and down the UK”.
“Co-op has been the leading voice on tackling retail crime within our own shops, but we need the government and local authorities to invest more time, money and effort into fighting the illicit tobacco trade,” he said, adding that the government’s £30 million commitment to the issue “won’t even touch the sides of the problem”.
Professor Taylor said crime should be treated as a central issue in efforts to regenerate high streets.
“Crime is not simply a consequence of high street decline, it is now one of its principle drivers,” she said. “Illicit tobacco, retail theft and the stolen goods market not only generate victims, but they also distort local economies, undermine legitimate commerce, erode public confidence, and weaken the opportunities for successful regeneration.”
“If Britain’s high streets are to experience the renaissance envisaged under Andy Burnham's policy platform, tackling crime must be recognised as a prerequisite for renaissance, not simply a parallel objective.”